Skip to main content

Change is here: Why all buyers and sellers need to be wary of the housing market

For so long, the housing market has been a seller’s market. With soaring demand and not many houses available for sale, sellers have been able to make all sorts of demands, and buyers have done everything they can — from all-cash offers to waiving inspections — to make their bids more attractive. The tides are starting to shift — but how will buyers and sellers be affected?

House with porch and a for sale sign
Andy Dean / Adobe Stock

It’s no longer a seller’s market

Soaring house prices have been a hallmark since the COVID-19 pandemic began, but that’s no longer the case. Redfin’s Homebuyer Demand Index saw its largest decline since April 2020. The Index measures requests for home tours and other home-buying services from Redfin, and during the week ending June 19, it was down 16%, the biggest decrease in two years.

Recommended Videos

More and more sellers — 6.1% — are also recording a price drop, which is a record high dating back to 2015. According to Redfin chief economist Daryl Fairweather, “a record share [of home sellers] are dropping their asking price.”

Fairweather noted that prices haven’t yet significantly declined, but we could see major decreases next year if the market continues this trend.

According to Fortune, markets that have seen prices start to drop include Austin, Sacramento, Tacoma, and metro areas of Utah.

Lizy Hoeffer, owner and mortgage broker at Cross Country Mortgage LLC, told Yahoo Money, “If you overprice your home in any market, you’re going to feel resistance.”

Image used with permission by copyright holder

Borrowing costs are going up

Why are home prices beginning to drop? In short, because the demand isn’t there as home buyers can’t find affordable opportunities. Fairweather told Fortune that the market has slowed since the Fed raised interest rates and that it’s “almost 30% more expensive to buy a home than it was just a year ago.”

High mortgage rates have made it impossible for some people to participate in the market. The rate for a 30-year fixed rate mortgage is currently 5.51%, an increase of more than two percentage points in the last six months. At the same time last year, the rate averaged 2.88%. According to Yahoo Money, the monthly mortgage payment on a median-priced home is up some 60% more than last year due to rising mortgage rates.

According to the latest MBA Weekly Survey, mortgage applications decreased 1.7% from one week earlier. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said in a statement, “Mortgage rates were mostly unchanged, but applications declined for the second straight week. Purchase applications for both conventional and government loans continue to be weaker due to the combination of much higher mortgage rates and the worsening economic outlook.”

people attending a home showing with for sale sign
The Good Brigade / Getty Images

11 states that have the most to worry about

Whether we’re looking at a market slowdown or a market crash, not every individual market is the same. Moody Analytics reported that in the first quarter of 2022, home prices surged an average of 16% nationally — but markets in some states rose less than 12.5%, while 11 soared more than 20%.

These states included Arizona, Florida, Georgia, Hawaii, Idaho, Nevada, North Carolina, South Carolina, Utah, Tennessee, and Washington.

If there is a market crash, homes in these 11 states could be at most danger of being overvalued, according to Newsweek, which means the volatility would likely start there.

family moving their boxes into their new home
Image used with permission by copyright holder

A crash or a correction of the housing market?

So, do the experts expect a crash or a market correction? Moody’s Analytics chief economist Mark Zandi told Newsweek he didn’t believe we’d see a crash for several reasons: the market is currently very tight; lending has been good, and underwriting has been strong; and while mortgage rates are rising, they’re not complicated.

Zandi explained, “You need lots of defaults in distressed sales to get prices to fall sharply. And I just don’t see that happening.” He added that this would be more likely if both interest rates and unemployment were unusually high.

Whether or not we see a correction or a crash, one thing is for certain: Change is coming to the housing market; in some places, it’s already here.

Editors' Recommendations

How to keep Costco croissants fresh for weeks (or months)
Don't throw out those stale croissants from Costco: 6 things to do instead
Costco croissants

The one thing we love about Costco is that we can buy the things we love in bulk. The one thing we wish Costco would change? It forces us to buy things in bulk. We know, it’s the ultimate catch-22 of first-world problems.

Croissants from Costco are some of the best you can buy, which itself is a weird statement. How is it that a warehouse store has baked goods that are better — and often fresher — than a lot of local bakeries? We love Costco croissants, but most households can’t get through 12 big croissants in a few days’ time. What can you do? 

Read more
Should you power wash your house in the fall? Here are 6 things to wash at the end of the season
Power wash your house in the fall — you'll be happy with the results
Blue house in autumn

The fall season is a prime time to check off some of those pesky household chores on your to-do list. With the kids back in school, autumn is a time to wrap up all things summer and start preparing for winter. This includes, of course, floor-to-ceiling cleaning — tedious but necessary work. Rest easy knowing there's at least one quick task, and it may even be a little fun: pressure washing your home's exterior. We'll walk you through some ways to power wash your house in fall with just five quick projects. You can have your house sparkling clean and prepared to survive the winter.

What is power washing?
Power washing is one of the final steps you should take before winter arrives. Odds are, there are leaves and other pieces of debris wedged in the gutters and around your home's exterior, and power washing removes all of this debris before it freezes over. Before the temperature drops below freezing, start the process of removing dirt, mildew, mud, and other blemishes with the power of pressurized, heated water.

Read more
The best times to do your Costco shopping, according to workers and members
Here's when you can avoid Costco crowds
Costco warehouse and grocery store interior

If you love Costco as much as we do, you probably think there is no bad time to hit up the superstore. But if you're looking to avoid the rush of people and long lines, there are better times to go than others. As many know, Reddit has a wealth of information about Costco under the subreddit r/Costco, where droves of shoppers log in to ask all sorts of questions — from the best deals to their favorite purchases. One recently asked the question: "What is factually the best time to go to Costco? Weekdays, weekends, sunny, rainy, snowy days?" and the answers do not disappoint.

The best of the best
Of course, it wouldn't be social media without some entertainment thrown in, and this question got plenty of those responses. The most popular: "When you are craving a hot dog." While it's funny, Costco makes headlines for never increasing the price of their hot dog plus soda deal in the 40 years it's served up the tasty treat (which can be yours for the low price of $1.50). Another happy shopper recently found another good time to go: "Apparently during [the] Super Bowl." Makes sense.

Read more